Mortgage Information and insight from a Utah Mortgage Lender.

Why you need to get Pre-Approved not just Pre-Qualified for your new home

I talk to many people each week here in Utah that call and ask if they can get pre-qualified to purchase a new home.  My response to them is often the same "I would be happy to get you pre-qualified but what you really need to do is get fully pre-approved prior to beginning your home search."  The difference is simple.  Pre-qualification means that you tell me how much money you make, what your approximate credit score is, what your debt payments are each month, and how much money you have in the bank.  We also may discuss how long you have been at your current job, in the same line of work, at your current and former addresses and so forth.  Sounds pretty thorough right?  The only problem is you are telling me all of these items with out me actually verifying them with supporting documentation.

What's the big deal just take my word for it.....

Many of you are in such a hurry to move on to the house hunting that you don't want to take the time necessary to put together all of your supporting documentation i.e. tax returns, W2's, pay stubs, bank statements, etc.  The problem with this is that a good deal of the time I find that there are some minor and or major discrepancies from what people tell me and what the real story is.

Do people flat out lie?

For the most part I would say absolutely not.  It's just that people sometimes think that there credit score was 700 8 months ago when they bought that new car so it must be higher then that now.  They forget that getting a new loan can lower your score, or they may not know that their wife has added a couple thousand dollars to their RC Willey credit card balance and that has hit their credit score pretty hard.

Another thing I see all the time is someone who has worked at their job for a year or so and they get paid $36,000 per year salary and another $7,000 in commissions or bonus income.  They then tell me that they make $43,000 per year.  True.  The problem is, if I were to qualify them at $43,000 and they went out and put an offer on a home based on that pre-qualified amount they would be very disappointed when they got the offer accepted and then brought me their income documentation at which point I would have to break the bad news to them that we can only use the $36,000 base salary for qualifying as you have to have a 2 year history of overtime, bonus, or commission in order to count them for qualifying purposes.

That is just one example of things that can be missed with just a basic pre-qualification versus a full pre-approval.  There are many many more reasons to get fully pre-approved and one of the best reasons is this,

NO SURPRISES.....

If you have already taken the time to get your full income documents together and into me then I will go through it and come up with your qualifiable income.  I will then have the underwriter do the same so that we know exactly what you qualify for right down to the dollar.  We will run a tri-merge 3 bureau credit report, order verifications of employment and 4506T tax transcripts from the IRS.  We will have a full file all ready to close once you find the home of our dreams.

Using a Real Estate Agent....

I highly recommend the use of a professional Realtor to help you buy a home.  The benefits are numerous and the cost is usually FREE to you.  In Utah it is customary to have the sellers pay the buyers agent commission.  I would say in over 99 out of 100 homes sold the buyers agent commission is paid by the seller if not 100 out of 100.  So why not have an advocate on your side.  Someone who can watch out for your best interests and help to make sure that what you see is really what your getting.  Click here to see a list of my preferred agents.  I have personally worked with each one of these agents and hand picked them from 1000's of licensed agents here in Utah.

Appraisal and Title Work....

Once you find that perfect home all that is left on our end since you got fully approved is to order an appraisal and title work.  We can usually have these items back in just a few short days.  Once they come back and if everything is acceptable to you such as the title history and the appraised value, we will then hand in the full file to be underwritten in house just a few feet away from my office.  I will not send your file off to be underwritten like most banks and ALL brokers do.  I will simply walk the file over to our underwriters desk and put it in her stand up to be underwritten and approved within 24 hours.

Clear to Close....

Once your file is approved and we have met any conditions then you are clear to close.  We then order docs and make arrangements with the title company to set up a closing time.  See how easy that is?  Compare this to finding your home first and then compiling your paper work, then having us order all of the required verifications, then ordering the title and appraisal.  We can usually shave a week or 2 off of the closing time frame and make the whole process much smoother and more relaxing .

So before you start looking for your next home....

Remember to get fully pre-approved.  It makes your offer much stronger if you can tell the sellers that you are fully pre-approved and that you can close in 2 weeks versus 30-45 days like most people who will be submitting competing offers.  You can start the pre-approval process today very simply by applying online 24 hours a day at www.applywithstetson.com or call me at 801-318-4996. 

Stetson Lowe - www.applywithstetson.com - Utah's #1 mortgage professional

 

Rent vs. Own - Right Now The Answer is Easy

 

I am sure their will come a day again soon where the proverbial question should I rent a home or buy a home will actually be a difficult one.  Fortunately for most right now the answer is easy, BUY!!

Here are a few reasons why I personally feel its not even a question (at least for the next few months).

1.  FREE MONEY.  With the feds handing out $8,000 big ones for the next few weeks and possibly months depending on your contract why not take old Uncle Sam up on a big hand out.  It's kind of like having the rich uncle I never had, except Uncle Sam is not rich but he acts like it and he has a money printer so whats the diff?

2.  Lowest average interest rates in nearly 40 years.  Yes there have been a few dips where rates were a few 10th's of a percentage point lower then they are today but on average there never has been and never will be a time where you will pay The Man less interest on your loan.

3.  Low Home Prices.  With bank owned REO properties dotting the landscape and short sales starting to pour in it has brought all of the home prices here in Utah back down to a manageable price range.  You can pick up a great starter home built in the last 10 years with everything you NEED for less then $200,000.  Need being the key word there.  Sure you can still spend as much as your heart desires on a home but at least the entry level homes have come back down to earth.  When the banks finally churn through their foreclosures watch out as the cost of building a home has not come down as much as the prices have so I expect the price of new home's to jump back up in the next 2 years.

4.  Tax breaks.  In a time where there is no where to go but up for our taxes you need to have every tax advantage you can.  The 1098 tax form from my mortgage company is the only letter they send me every year that I am happy to see in the mail box.  It will literally increase your tax return by $1000's of dollars every year.  Not to mention energy saving tax credits you qualify for when you do energy improvements to your home like adding insulation to the basement, attic and air ducts.

5.  Having something you can call your own.  Can you even put a price tag on being able to paint a wall any color you want any time you want with out having to call your landlord for approval.  How about if you want to switch from cable to direct tv, you wont be at the mercy of your landlord who may put the kibosh on any satellites on the roof.

6.  Building equity for you not your landlord.  I actually am a landlord and do own rental property so in the essence of full disclosure I have to admit that I do benefit from tenants who help build my equity.  If they ask me I always tell them that we need to get them on the road to home ownership.  It's everyones right to own their own piece of property, a place they can call their own.  For some the road to home ownership is longer then for others do to credit issues, income limitations and for other very valid reasons.  There are those that could be buying a home right now, those are the ones I am talking to when I say stop building your landlords equity and start building your own.

7.  Neighborhood, schools for your kids, growing your own garden.....

 

The list could literally go on and on but I think you catch my drift.  Right now with the financing options that still allow some to get into a home with little or NO down payment there is really no reason (if you qualify) you should be renting over buying a home.

Here is a link to a great Rent vs Buy Calculator you can go to and plug in your own numbers or those of a client if you are an agent and have a client that needs a little more proof that renting is better then buying.  With this Rent vs Buy Calculator you can see if a dollar amount how much of an advantage it would be to buy a home right now over continuing to rent. 

So if you live in Lehi, American Fork, Pleasant Grove, Lindon, Orem, Provo, Springville, Spanish Fork, Payson, Santiquin, Saratoga Springs, Eagle Mountain or  even Ogden to St. George you should really take a closer look at buying rather then continuing to flush your rent money down the toilet every month.

Take the plunge get pre-qualified today!

Stetson Lowe - Security Home Mortgage

Security Home Mortgage is a correspondent lender.  We are a leader in Utah in FHA, Utah Housing, USDA Rural Development, Conventional Fannie Mae and Freddie Mac Mortgages.

Utah Housing a wonderful 0 down payment option

 

There is a lot to be said of the great mortgage program administered through the Utah Housing Corporation.  This 0 money down mortgage option is a fantastic way for home buyers to make the dream of home ownership become a reality. 

Here's how it works for you if you are looking to buy a home and down payment is standing in your way.  First contact a lender who is approved to do Utah Housing loans.  Obviously I am partial to Security Home Mortgage and our great UH loans.

Second you need to fill out an application either on line www.applywithstetson.comor in person.  Some helpful information to have handy while filling out your application would be your W2's and or pay stubs so you know your gross income, your personal information such as your social security # and date of birth and your employment and residence history for the last 2 years.

Third check to see if you qualify for a Utah Housing 0 down Mortgage.  Currently UH requires a 660 fico and a standard FHA automated approval through FHA scorecard Fannie Mae's FHA automated underwriting engine.

Once you are pre-approved this is what you can expect.  You will have a 1st mortgage which is a standard FHA loan.  You will also have a 2nd mortgage which will be for up to 6% of the 1st mortgage amount.  The proceeds from this loan can go towards down payment requirements (currently 3.5% of the purchase price on an fha loan) and closing costs.  As of the time of this post the current Utah Housing interest rate is 4.75% on the 1st mortgage and 7% on the second mortgage.

You will be required to pay upfront and monthly mortgage insurance just like you would with a standard FHA loan.

Utah housing mortgage loans may not be for everyone, if you have down payment saved or if you are able to have down payment funds gifted to you, you might be better off with a Conventional loan or an FHA loan, if you are buying a home in a rural area you may even want to look into the USDA Rural Development loan as well.

If down payment is holding you back I would definitely recommend checking into the Utah Housing loan, especially for the next couple of months while you can still take advantage of the $8000 tax credit being offered from the IRS, the $8000 can be used to pay back the Utah housing 2nd mortgage although there are limitations to how quickly you can pay off the loans with out incurring a penalty.

Click on this link for a list of frequently asked questions about on Utah Housing Mortgage Loans

You can also view the income limits in your county.

Or to find out more give me a call.

Stetson Lowe - Security Home Mortgage - 801-318-4996
  

New home sales drop 11 percent in January, new low

New home sales plummet 11 percent in January, the 3rd monthly decline in a row

Story from YahooFinance.com

WASHINGTON (AP) -- Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades.

The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who were expecting a 5 percent increase over December's pace.

While winter storms were partly to blame, home sales have fallen for three straight months despite sweeping government support. Economists were already worried that an improvement in sales in the second half of last year could falter as various government support programs are withdrawn.

"There is no doubt that January and February are going to be messy months for housing, given the severe weather conditions, but that doesn't take away from the fact that the housing sector has taken another big step back, even with the government aid," Jennifer Lee, a senior economist at BMO Capital Markets, said in a research note.

A rebound in housing in the second half of last year helped to boost overall economic growth back into positive territory. Each new home built, for example, creates about three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, according to the National Association of Home Builders.

However, economists are worried that if housing falters in coming months, that will be one more headwind the recovery will have to overcome. The decline to an annual purchase rate of 309,000 in January was 6 percent below the previous record low set in January last year.

"I don't think we are going to have a double-dip recession in housing, but it is going to take us longer to recover from a very deep hole," said Patrick Newport, an economist at IHS Global Insight.

January's weakness was evident in all regions except the Midwest, where sales posted a 2.1 percent increase. Sales were down 35 percent in the Northeast, 12 percent in the West and almost 10 percent in the South.

The drop in sales pushed the median sales price down to $203,500. That was down 5.6 percent from December's median sales price of $215,600, and off 2.4 percent from year-ago prices.

New home sales for all of 2009 had fallen by almost 23 percent to 374,000, the worst year on record. The National Association of Home Builders is forecasting that sales will rise to more than 500,000 sales this year, an improvement from 2009 but still far below the boom years of 2003 through 2006 when builders clocked more than 1 million new home sales per year.

January's data increased concerns that the housing rebound could falter in coming months as the government withdraws the support it has used to try to bolster the housing market. The real estate crisis was the epicenter of the country's overall recession, the worst downturn since the 1930s.

The Federal Reserve has been holding down mortgage rates by buying $1.25 trillion in mortgage-backed securities, but that program is set to end March 31. And temporary tax credits to bolster home buying are scheduled to expire at the end of April.

Federal Reserve Chairman Ben Bernanke told Congress Wednesday that by holding the securities on its books the central bank would continue to help keep mortgage rates low. Economists believe that as long as the Fed owns the securities it will reduce the overall supply and thus help support the price.

Bernanke, delivering the Fed's twice-a-year economic report to Congress, said that the Fed's record low interest rates were still needed to attack high unemployment levels and help the overall economy recover.

$8000 - $6500 Tax Credit - Tick Tock, Tick Tock

 

Somewhere In, UT

Tick tock, tick tock, the clock is ticking on the tax credit currently available to first time home buyers and those that have lived in their homes for 5 years who are looking to buy.  The program comes to a close on April 30, 2010.   First time home buyers in Utah have the most to gain as the government by way of the IRS is going to line your pockets with $8000 big ones just for signing on the dotted line(s) at closing.  Yes line(s) is plural because there are hundreds of lines you will be signing on.

Where was my $8000 handout when I bought my first home?  No where to be found I can tell you that.  All I got was a crappy 2/228 arm from Long Beach mortgage with a 7.25% rate and a cheap welcome package from our builder.  Man o man what I would have given to get the $8000 bucks that these kids are getting today.  I have some clients that are using it to buy furniture, some are planning to landscape and still some others are paying off their car loans.  No matter how you use it, you can't really lose as long as you don't miss out.

Slightly less enticing but still amazing is the $6500 available to those that have lived in their current home consecutively for the last 5 years or more.  Although not quite the $8000 being shoveled out to the greenies $6500 seems to be enough to get some of the fence sitters off the fence and into the game.  I have several clients out looking right now so they can cash in just in time to claim their prize.  One lovely lady I explained this move up credit to was attentively writing down notes so that she could go back to her husband with exactly what they qualified for and see if she could use her best methods of persuasion on her husband to get him to leave their home of 26 years and cash in on one of the many bank owned deals of a century that are to be had right now in Utah County.   I didn't ask what her method was.....moving on.

The moral of the story folks is to make sure you understand the time lines and deadlines to this program.  As much as I would like to see it extended over and over again, I tend to think that all good things must come to an end, at least that's what my Mom used to tell me when we were leaving Lagoon after our annual Questar family day, boy how I hated to see those days end.

We can get mortgage's done start to finish in as little as 7 days but why wait till the last tick of the clock?

For more useful information and frequently asked questions on the federal tax credit go to http://www.federalhousingtaxcredit.com/ I found this site to have some great information on the topic.

Your comments are always welcomed.  Stetson Lowe is a expert in the mortgage industry specializing in FHA, Conventional, USDA and Utah Housing Loans.  Don't attempt to blog like this at home:)